ICICI Securities: HDFC Bank’s Q1 Reports Resilient, Confident Show Despite Challenges 
A customer uses an HDFC Bank Ltd. mobile automated teller machine van in a residential neighborhood of Mumbai (Photographer: Dhiraj Singh/Bloomberg)

ICICI Securities: HDFC Bank’s Q1 Reports Resilient, Confident Show Despite Challenges 

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy

ICICI Securities Report

HDFC Bank’s Q1 FY21 performance was commendable and the management’s narrative was resilient, despite challenges reflected in: 1) Moratorium 2.0 portfolio at 9% (lowest heard till now), 2) confidence in credit reserves of approximately 55 basis points coupled with 76% Non Performing Loan coverage being sufficient ceteris paribus, 3) digital initiatives, franchise strength and sharp focus helping capture opportunities without compromising quality.

Market share gain (21% advance growth), steady Net Interest Margin Security at 4.3% (despite 70bps Marginal Cost of Funds Based Lending Rate (MCLR) cut and operating cost agility (down 24% YoY ex-employee cost) aided 7% core operating profit growth in the most disrupted quarter. Accelerated recognition of 30bps of advances and expedited provisioning (coverage up 4%) initiated on non-morat pool, though contingency buffer was limited at mere 10bps. Earnings growth of 20% was buoyed by treasury gains of Rs 10.9 billion. Performance reaffirms our stance that HDFC Bank will lead responsibly and is best positioned to rebound quicker offsetting near term weakness.

Click on the attachment to read the full report:

ICICI Securities HDFC Bank Q1FY21 Results.pdf


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